The cuts to the IRS budget and staffing are no secret. Since 2010 the IRS budget has been reduced by an inflation-adjusted 19 percent. Since the mid-1990s, when IRS staffing levels were at their peak, staffing levels at the agencies have plummeted. Since 2010 alone, there are 13,000 fewer employees at the agency representing a decrease of 14 percent. Furthermore, there are almost 10,000 fewer enforcement personnel representing a 20 percent decline in this department. As staffing levels have decreased, burdens have increased through natural population increases, implementation of FATCA & the ACA, and stolen identity tax fraud that is occupying significant enforcement resources.
The result of these cuts was a tax season with some of the worst taxpayer support in recent memory. Fewer than half of all taxpayers seeking guidance from the IRS had their call answered. For those taxpayers that were able to reach a representative at the IRS, their wait time averaged 28 minutes. Unfortunately, according to the National Taxpayer Advocate, a new plan by the IRS could result in phone service deteriorating even further. And to add insult to injury for many business travelers, the IRS also announced the lowest business travel mileage reimbursement rate since 2011.
IRS Unveils Plan to Push Taxpayers Away from Phone and Face-to-Face Support to the Internet
The IRS is planning to implement a course of action that would further damage its phone and face-to-face report to emphasize online support. In a report to Congress National Taxpayer Advocate Nina Olsen stated, “Implicit in the plan — and explicit in internal discussion — is an intention on the part of the IRS to substantially reduce telephone and face-to-face interaction with taxpayers. The key unanswered question is by how much. … It is incumbent upon the IRS to be much more specific about how much personal taxpayer assistance it expects to provide.” The IRS cutbacks are likely to cause taxpayers to have to seek out professional tax preparers, CPAs, and tax attorneys for guidance on tax concerns. The agency has already halted its practice of assisting low-income taxpayers file their annual tax return. Filing a tax return is necessary to receive one’s tax refund so even individuals who may not reach the adjusted gross income (AGI) filing threshold still have an interest in filing an accurate and complete return.
Ms. Olsen correctly states that the problems faced by taxpayers are not “cookie cutter” problems that can be thoroughly addressed and answered through online guides and FAQs. It also warns that “[taxpayers] will agree to assessments and adjustments they never should and they will forfeit significant due process protections.” Since IRS support is unlikely to match even the seriously lacking results of 2015, taxpayers should seriously consider speaking to a tax professional regarding their tax questions and concerns.
Frequent Business Travelers to Be Affected by Drop in Business Mileage Reimbursement Rates
Frequent business travelers also received unwelcome news regarding the IRS has reduced its business mileage reimbursement rate to a 5-year low. While the reimbursement rate was set at 57.5 cents per a mile for the 2015 tax year, the rate has dropped nearly 10 percent to 54 cents per a mile in 2016. Employees are also likely to be affected by a decrease in the moving and mileage rate set by the IRS which also decreased from 23 cents to 19 cents per a mile. These reductions are likely to hurt employees in the sales-focused and other positions where travel by personal vehicle is common. However, employers may welcome the reimbursement reduction as a means of controlling costs in light of the reduced price of fuel compared to recent years. However, if fuel prices should spike upward, employers and employees may be left at loggerheads regarding an equitable resolution to the issue.
Rely on an Experienced Tax Attorney for IRS Guidance
If you are seeking guidance for a tax audit, a tax problem, or other tax issues Robert Hoffman of the Hoffman Law Offices can offer trusted guidance. Mr. Hoffman is experienced assisting businesses and individuals with pressing concerns. To schedule a free, confidential tax consultation call 800-897-3915 or contact the office online.